Discussions on Insurance, Liability Law and Economics, plus occasional other subjects.

September 29, 2009

I got a kick out of thisarticle in the Washington Times on Sept. 28. The point of the story is that the trial lawyers' lobby might be having financial difficulty. The part I find interesting is that AAJ says they lost $670,000, but they sought $120,000,000 in the lawsuit. The article offers no explanation for the 17,900% mark up.

"...AAJ lost a lawsuit against Wachovia Bank over the collapse of a 2007 loan deal to finance the association's purchase of an office building as its new Washington headquarters.

The association lost more than $670,000 when Wachovia backed out of the loan deal, citing a clause in the agreement that allowed the bank to nix the deal if a "material adverse change" in market conditions hampered its ability to resell all or part of the loan."

"AAJ was unable to collect the $120 million it sought in the lawsuit."

August 10, 2009

Q: [Lakeland (Fla) LedgerJan 14, 2007] Industry lobbyists say if Florida gets too tough with insurance companies, it will drive the insurers from the state. Can Florida afford to do that given that private insurance is already less available and more costly in many areas?

A: [Robert Hunter, Consumer Federation of America] This is the same threat we heard when California was considering its tough law, Proposition 103. It did not happen, so competition remains strong in California, even with powerful consumer protections in place.

This threat has been heard in many states over the years and, for a state as large and important as Florida, is quite hollow. The legislature cannot continue to give away the store to the insurers in a vain attempt to please them into treating consumers well.

The insurers promised, after Hurricane Andrew, to bring stability in prices and availability if states (including Florida and Texas, where I was commissioner) gave them the three things they demanded: much higher rates based on models, sharp cuts in coverage, such as deductibles, and pools (like Citizens) where they could dump high risks and keep profitable risks for themselves.

We gave them those things and they reneged on their promises, obviously. The legislature should not be fooled again by remembering the old and true adage, "Fool me once, shame on you. Fool me twice, shame on me."

If insurers had the audacity to leave, the state has several options to make sure affordable insurance is in place, including requiring the super-profitable auto insurers to offer home insurance, removing wind from the homeowners insurance policy and putting it into a state pool, competitively bid ding large blocks of houses to insurers from around the world and other options.

Politicians and regulators pushed back, authoring a complex set of government interventions that critics now say bought lower insurance rates at a steep cost - endangering the state's financial future.

If a major hurricane hit a large metropolitan area today, the state could be forced to boost taxes on insurance policies and take out billions in debt to cover shortfalls in taxpayer-backed insurance plans. Some doomsday scenarios include bankruptcy.

"They get a big hit, like Andrew or bigger, they're going to have to go to the bond markets at a time that it's not good to go to a bond market," said Walter Dartland, executive director of the Consumer Federation of the Southeast, a consumer watchdog group.

Funding that debt will be difficult, Dartland said. "They'll have to go across the board and raise taxes almost on everything."

Eventually, many believe, the danger will lift, with lawmakers passing a sweeping overhaul of state-backed insurance plans that should help keep the state solvent - if luck is on Florida's side while the changes take effect.

It could take six years to entirely wipe away billions of dollars of state obligations to back up insurance companies in the event of a catastrophe. And with premium increases in the state-backed property insurance program for consumers capped by law, it's unclear how long the state will have to increase rates before premiums can cover the program's responsibilities.

July 31, 2009

June 11, 2009

I just received my copy in the mail today from MIT Press. It is available on Amazonfor $ 37.12. What a bargain. In the fine print on the cover you can see while I am not a primary author I do get the “with” treatment. Other notables are Neil Doherty, bob Klein and Mark Pauly.

What is nice about the Amazon listing is that there are a ton of blurbs. However, there is no Kindle edition yet. Nor are there any free peeks. You’ll just have to wait.

• 62 percent believe consumers should be allowed to choose their property insurance provider "even if the prices are not fully regulated by the state" rather than to be limited to purchasing insurance from a provider whose prices are fully regulated.

• 60 percent of Florida voters are either "very" or "somewhat" worried that their insurance company may not be able to pay their claim if the state is hit with more hurricanes this summer, like in 2004 and 2005.

June 05, 2009

Not to be confused with the new little Leverty. Riskprof’s Ty Leverty had a little boy earlier this spring. I won’t disclose his name out of respect to his privacy, but it is a real strong Irish name. I am particularly fond of Finbarr as a name, but my wife (who was probably thinking of the then wee one’s future) repulsed with significant gusto my attempts to name any of my little sigmas Finbarr. Just so you know -- I did stop moping about this years ago.

Here is the real Friday levity. Evidently, someone sued Pepsi (the owners of Cap’n Crunch) for false advertising for $5 billion because there were no crunchberries in the cereal. I realize $5 billion is much anymore, but I think the fact that the word “crunchberry” is not in a real dictionary or even MS Word’s might have been a clue.

boingboing has a short story, but the comments are hilarious.. some of my favorites so far..

#7. I heard that Crunch [had] to stop using his formal title when it was exposed that he never actually served in the military.

#3. What!? Next thing you'll be telling me is that Froot Loops aren't made from real fruit, and that there's no nuts in Grape Nuts!

#37. Don't be silly. Froot Loops are made from froot.

#9. I love that she's suing on behalf of, not just herself, but the "other people" who have been similarly misled. […]Don't kid yourself, lady, you are an island in this belief system.

#33 Follow up suit: Lucky Charms are not "magically delicious." They are merely "delicious."

#48. So... that bowl I just had of Rice Chex didn't really have any Czecks (sic) in it, right?